tag:blogger.com,1999:blog-31427364.post2300238110656178299..comments2024-03-26T03:52:23.395-07:00Comments on Housing Analysis: The Bullwhip Effect on Supply Chain Managementmohicanhttp://www.blogger.com/profile/06094213357140749289noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-31427364.post-202931077123168282013-06-11T07:48:53.077-07:002013-06-11T07:48:53.077-07:00Also note that it is similar to "hi", as...Also note that it is similar to "hi", as a greeting, and is not expected <a href="http://www.clicktale.com/enterprise" rel="nofollow">customer behavior analysis</a> in a threatening note or letter. Politeness is not expected in an angry threatening letter unless it has the appearance of sarcasm. wasimhttps://www.blogger.com/profile/15172244311783776337noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-86596176622052243042007-11-28T17:06:00.000-08:002007-11-28T17:06:00.000-08:00"Once we move towards low single digit appreciatio..."<I>Once we move towards low single digit appreciation, many existing speculative owners will be or could be offside and will want to exit.</I>"<BR/><BR/>Which is why I always chuckle a little when I see predictions that the market will "level out" or return to modest gains. There is no way it can level out, because as soon as it stops going up the speculators will dump their holdings. They have to. And once they do, the market will turn.<BR/><BR/>It's theoretically possible that the current feedback loop can continue and it'll keep appreciating toward infinity, but there's no way to return to a normal market without a crash.Ryanhttps://www.blogger.com/profile/10104704096049638272noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-71612167902111205902007-11-28T11:39:00.000-08:002007-11-28T11:39:00.000-08:00Apropos of your post, here’s what the CEO of Centr...Apropos of your post, here’s what the CEO of Centrex, a large, Texas-based builder noted yesterday:<BR/><BR/><I>“Timothy Eller, the CEO of Centex Corp., said, ‘There is no way to predict when this thing will bottom.’”<BR/><BR/>“Tomnitz said the current slump is different because speculators who had bid up prices disappeared. ‘Once those investors could no longer buy a home and flip it for 15, 20 percent more, they left the market,’ he said.”</I><BR/><BR/>I think his comments speak to one of the potential triggers for a correction here. Once we move towards low single digit appreciation, many existing speculative owners will be or could be offside and will want to exit. Other would be speculators will avoid investing. Already, 50% or more of DT condos are owned by investors, even as new building continues at a furious pace. It doesn't take a rocket scientist to figure out what will happen if (when) investment enthusiasm dries up.johnnyrenthttps://www.blogger.com/profile/02618190483376922226noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-66040136331833278232007-11-28T11:11:00.000-08:002007-11-28T11:11:00.000-08:00Sort of OT, but an infamous example is the fibreop...Sort of OT, but an infamous example is the fibreoptic buildout. As internet usuage increased, the infrastructure companies sped up their build out and added capacity. As soon as they had done this, internet usuage increased so they continued to build out.<BR/><BR/>Turns out that the company which estimated internet usuage, based the estimate on capacity, so it was a feedback loop that would perpetually would increase capacity. Until it all blew up. Don't know if there is truth to this or if it is an urban legend.freakohttps://www.blogger.com/profile/06236681769619303395noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-85111924364013859842007-11-28T09:52:00.000-08:002007-11-28T09:52:00.000-08:00This used to happen with agricultural commodities ...This used to happen with agricultural commodities before the advent of derivatives trading in things like pork bellies and FCOJ.<BR/><BR/>The automakers have tried to figure this out and are trying to work together to better match supply with demand and reduce price changes in the form of incentives, along with the supply chain improvements (some have done better than others). The housing market, even on local scales, is too fractured for this to occur.jessehttps://www.blogger.com/profile/02155122147972263497noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-16631979423941811542007-11-28T09:19:00.000-08:002007-11-28T09:19:00.000-08:00How does this phenomena effects our local real est...How does this phenomena effects our local real estate market? <BR/><BR/>Prices are low and fundamental housing demand exceeds supply.<BR/><BR/>Developers react and start to build supply - - insert 18 month delay.<BR/><BR/>Meanwhile, sensing opportunity because of shortage and added to fundamental demand, more housing is ordered - - orders (pre-sales) increase.<BR/><BR/>Developers start building even more supply - - 18-24 month lag.<BR/><BR/>Hoarding behaviour begins to take place with people ordering more housing than they need, perceiving a shortage.<BR/><BR/>Developers begin completing initial units which begins to meet the fundamental demand.<BR/><BR/>Hoarding is common, speculation is rampant as there is still a perceived shortage - fundamental demand is low again.<BR/><BR/>This is where we are now.<BR/><BR/>Developers continue to complete inventory and the bullwhip effect begins to take place.<BR/><BR/>The backlog of demanded inventory is filled and hoarded units are added to supply as the perceived shortage is over thus exacerbating the effects of the backlog.<BR/><BR/>Bust.<BR/><BR/>Restart.mohicanhttps://www.blogger.com/profile/06094213357140749289noreply@blogger.com